Are Protestants Bad at Monetary Policy?

Christopher Mahoney, former vice chairman of Moody’s, set back ecumenism by several years this week when he charged Protestants with being incapable of understanding monetary policy . His argument, or at least his assertion, was that Protestants refuse to countenance loose money policies even when necessary because they offer a free lunch. And free lunches are (as  Christopher Dawson might argue ) inimical to the Protestant ethic: “You could spread out a smorgasbord of caviar, salmon, lobster and Dom Perignon, and they would turn their heads and eat a cheese sandwich.” So much for grace alone.

A blogger at Slate counters that Protestant central bankers performed the best of any religious group (Eccles, mentioned below, was a Mormon):

The real heroes of American central banking are Protestants—Eugene Black who knew when to inflate and Paul Volcker who knew when to disinflate. William McChesney Martin I would say ranks alongside Greenspan as a bit of a mixed bag. No coincidence that Martin and Greenspan are the two really long-tenured Fed chairmen. The more years you put on the job the more likely you’ll eventually mess something up.

Eccles’ term in office is a little hard to evaluate since the unusual circumstances of fighting World War II and then post-war demobilization loom large in it. The tight money episode of 1937 was a disaster, but mostly you’d have to say his term in office consisted of recovery from the Depression and victory over Hitler. Not bad at all.

So, no, Protestants aren’t “bad” at monetary policy. This is a point suggested not only by a census of Fed chairs but also by a simple acknowledgment that managing monetary policy is a technical matter shaped more by the realities of economics than by one’s supposed cultural instincts (and I would not too readily accept the dichotomy proposed by Mahoney and Dawson). If some are incapable of understanding the point, past Protestant Fed chairs aren’t among them.